Valero Goes National

Reimaging of Diamond Shamrock stores to increase brand presence

SAN ANTONIO -- Valero Energy Corp. seems to have found its groove. Just as it wraps up a five-year reimaging program that brought larger, more relevant stores to its network of Valero-branded sites, it is now turning to its Diamond Shamrock brand for updating.

As reported in a CSP Daily News Flash yesterday, Valero will retire the approximately 30-year-old Diamond Shamrock brand and convert its 2,900 U.S. retail company-operated and branded wholesale sites to the Valero brand image. Putting Valero signs up at its stations stretching from South Dakota [image-nocss] to South Texas and from Arizona to Arkansas will give the company a national brand presence for the first time.

We are very excited about having the Valero name on our retail and wholesale sites across the country, said Bill Greehey, Valero's chairman and CEO. With Valero's growth in recent years, we've become one of the nation's leading refiners and one of the top 25 companies among the Fortune 500, so it was a logical next step to roll out the Valero brand nationwide.

The rebranding will bring Valero's distinctive teal-and-yellow signs to retail and branded wholesale stations across the country. There's a significant value to having our name in front of customers, potential investors, community leaders, business partners and media on a daily basis, said Greehey. We also believe that we'll capture synergies from supporting a single premier brand and realize greater benefits from our national advertising and sponsorships, like the Valero Texas Open.

Valero will spend an incremental $70 million over the next two years to reimage its 1,030 retail locations and the 830 branded wholesale sites in the Mid-Continent area. The vast majority of the stores will be re-imaged by fourth-quarter 2006.

The company will use the Valero brand at all of its premier-branded wholesale sites that meet certain image and volume requirements, and will continue to use its popular value brandsShamrock and Beaconfor smaller sites that do not meet the premier brand standards. Its 1,000 Canadian stores will continue to use the Ultramar brand name.

The timing of the rebranding comes as Valero goes through the process to acquire Premcor Inc. later this year, making Valero the largest refiner in North America. Valero received a request for additional information and documentary material from the Federal Trade Commission (FTC) in connection with the proposed acquisition earlier this week.

Company officials have been in contact with the FTC since the original filing was made on May 31. Valero expects to comply with the FTC's request quickly and anticipates closing on the acquisition in the early fall of 2005, pending FTC clearance, approval by Premcor's shareholders and completion of other customary closing conditions.

As we've said all along, we don't believe that there are any competitive issues with this acquisition, and we strongly believe that it will be good news for consumers as Valero has a great track record of investing in its refineries. And, based on our initial review, we're happy to say that we should be able to satisfy the FTC's request quickly, said Greehey.

San Antonio-based Valero Energy owns and operates 14 refineries throughout the United States, Canada and the Caribbean. It is also one of the nation's largest retail operators with more than 4,700 retail and wholesale branded outlets in the United States, Canada and the Caribbean.